GLOBALISATION

Globalisation

Globalisation and UK

Introduction

Has the current wave of globalization been of net benefit to the British economy? This question invites a “cost-benefit analysis” approach outlining some of the major advantages of globalisation to the UK but at the same time recognising some of the threats and costs that the deeper integration of the global economy can bring.

A few evaluative points to start with,

No immunity: Whether or not the UK has been a beneficiary of globalization it cannot isolate itself from the effects of the growth in international trade, capital flows and trans-national corporate activity. The UK needs to meet the competitive challenges of the next decade, otherwise it risks suffering a fall in economic growth and a decline in our relative living standards. If the economy handles the challenges of globalization well, it has little to fear and much to gain

Too early to say: It is too early to be very confident about the long term impact of globalization - the current wave still has some distance to travel.

Look at the bigger picture: The question focuses on consequences for the United Kingdom . Globalization affects individual people and individual businesses in different ways. Anecdotal evidence is not really good enough - we have to look at the broader picture to consider some of the winners and losers (Andherton and Whalley, 2006).

Benefits of globalisation on the UK

Here are some broad arguments in favour of globalisation as it has affected the UK,

Sustained economic growth: Over the last twelve years the UK has enjoyed a period of sustained economic growth, rising employment and improving living standards. Our growth has been very close to the trend rate of 2.5% per annum and this is one of the longest sustained growth phases in our post-war history. Rising levels of trade and investment spurred on by the challenges of international competition have contributed to this healthy growth picture

Lower inflation: Globalisation has brought down the prices of many of the imported goods and services that we need. This has helped to keep the rate of inflation down which ultimately means lower nominal interest rates. Indeed globalisation is a factor that has helped to improve the trade-off between unemployment and inflation

High inward investment: The UK has remained a favoured venue for inward foreign investment - indeed it has been the leading country for inward FDI flows within the European Union. Our flexible labour markets, competitive product markets, relatively low corporate taxes and other factors have encouraged a huge inflow of inward investment, this has boosted GDP, protected thousands of jobs and helped to finance our growing deficit on the current account of the balance of payments. Foreign investment by UK businesses has helped to build up our stock of overseas assets and now makes an important contribution to our balance of payments through a steady flow of net investment income (Dicken, 2007)

Rising productivity: The expansion of multinational businesses locating in the UK has helped to raise productivity and efficiency in the ...